Covid-19 bites: The Philippines revises economic targets

Worst recession: A sales assistant working at a shopping mall. The disruption in economic growth and poverty reduction is manifested in the downscaled socioeconomic targets for 2022. — Bloomberg

MANILA: President Duterte’s final year in office became doubly challenging as the Covid-19 crisis reversed much of the pre-pandemic gains made toward the administration’s goals to sustain robust economic growth, reduce joblessness and move up to upper-middle income country status.

The pandemic last year inflicted the Philippines’ worst post-war recession as gross domestic product (GDP) shrank by a record 9.6%, while pushing the unemployment rate to a 15-year high of 10.3% or 4.5 million jobless Filipinos at the height of the longest and most stringent Covid-19 lockdown in the region.The state planning agency National Economic and Development Authority (Neda) had taken stock of the pre-pandemic accomplishments while downscaling some of the more ambitious socioeconomic targets in light of the pandemic, through the updated Philippine Development Plan (PDP) 2017-2022 it released early this year.

“Earlier in 2018, we achieved a record-low poverty rate of 16.7% of the population, achieving our target of lifting some six million Filipinos out of poverty four years ahead of schedule. If not for the Covid-19 pandemic, we would have become an upper-middle income country at the end of 2020, two years ahead of our 2022 target,” Neda chief and socioeconomic planning secretary Karl Kendrick Chua said in the Duterte administration’s revised development blueprint.

“However, Covid-19 temporarily disrupted our growth momentum and development trajectory. To address this unprecedented crisis and save lives, the government made the difficult decision of imposing community quarantines in order to protect communities from the virus and beef up our health-care system. This disrupted the majority of our economic activities, leading to loss of income and jobs and temporarily reversing some of our economic gains from the first half of this administration,” Chua said.

This disruption in economic growth and poverty reduction was manifested in the downscaled socioeconomic targets for 2022.

For instance, the updated PDP 2017-2022 targeted to reduce poverty incidence to 15.5%-17.5% next year, a less ambitious goal compared with 13%-15% at the start of the administration.

It also expects the unemployment rate to remain elevated at 7% to 9% this year and next year when President Duterte steps down from office. The original PDP 2017-2022 wanted to slash the jobless rate to 3%-5% in 2022 from 5.4% in 2016.

Despite criticisms that the government’s war chest against the prolonged pandemic was meager, Duterte’s economic team maintained that fiscal prudence will shield the economy amid the protracted battle against the deadly coronavirus.

“At the start of this pandemic, I warned that the battle could be long. Considering this, it was important to maintain fiscal responsibility. We had to be ready for the long haul and keep our powder dry for a protracted battle. True enough, this pandemic has been a tough foe.

“Despite progress in the vaccination programs, countries around the world are still grappling with surges and spikes in infection due to the more contagious Delta variant,” finance secretary Carlos Dominguez III told members of the Financial Executives Institute of the Philippines last week. — The Philippine Daily Inquirer/ANN

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